KILOSBAYAN vs Morato

Fact: As a result of the decision in the case of KILOSBAYAN vs

Guingona which invalidates the Contract Lease between PCSO and
PGMC, the parties signed an Equipment Lease Agreement (ELA).
PGMC will lease the online lottery equipment and accessories to the
PCSO in consideration of a rental equivalent to 4.3% of the gross
amount of ticket sales derived by the PCSO from the operation of the
lottery. In the operation of the lottery, the PCSO will employ its own
personnel and it will be responsible for the loss or damage of the
equipment arising of any cause and the cost of the maintenance and
repair. Petitioner contends that validity of the said agreement on the
ground that it is substantially the same as the Contract of Lease which
was nullified by the court.

Issue:
1. Legal Standing of the Petitioners

2. ELA violates the provision of RA 1169 as amended by BP Blg 42

3. ELA requires for public bidding

Held:
1. Court declares that petitioners have no legal standing in the case
and cannot invoke the doctrine of law of the case because the
present case is not the same one litigated by the parties before.
The doctrine only applies before a court a second time after a
ruling of an appellate court. The standing of the petitioner is a
concept of in constitutional law and here no constitutional question
is actually involved. As such, petitioner failed to show that they
have a direct and personal interest in the case. As the case only
involves a contract between a private individuals and a government
corporation, the nature of the validity of the contract can only be
 raised by the Commission on Audit or the OMBUDSMAN.

2. The court noted that all the features on the old Contract of Lease
which constitute a joint venture agreement has been removed in
ELA. The PCSO now bears all the losses because the operation of
the business is completely on its hand. The court also clarifies the
interpretation of RA No. 1169 as amended by BP Blg 42. The court
held that the charter of the PCSO does not absolutely prohibit it
from holding or conducting the lottery “in collaboration,association,
or joint venture” with another party. What it intends to prohibit from
doing is to invest in business engaged in sweepstakes, races,
lotteries, and similar activities whether in
collaboration,association,or joint venture with other or by itself. The
reason is that PCSO should not invest in the business of a
competitor. Hence, this concludes that PCSO has the authority to
enter into a contract for holding of an online lottery whether in
association, collaboration, or joint venture with another as long as
the PCSO itself holds and conducts such lottery.

3. The ELA does not need to undergo public bidding as EO No 301

only applies to contracts to purchase supplies, materials, and
equipment. It does to cover contract of lease of equipment like the
ELA.

Ruling: Dismissed